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Sabke saath, sabka vikas Budget

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Tina Edwin
Tina EdwinMar 01, 2015 | 13:59

Sabke saath, sabka vikas Budget

There was no big bang announcement in the Budget. That was common rant after finance minister Arun Jaitley presented the Budget for 2015-16. But anyone who paid any heed to the Economic Survey on Friday was quite prepared for a pragmatic and yet-take-everyone-along Budget. In many ways the Economic Survey had set the tone for the Union Budget.

Of course, not everyone will be happy with the Budget - individual taxpayers are certainly disappointed and corporate taxpayers have to adjust to the idea that many exemptions they have enjoyed for many decades will be withdrawn beginning 2016-17 and in four years they will be paying more taxes, notwithstanding the lowering of the headline tax rate. Yet, companies can take comfort that tax administration will not give them too many headaches.

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Yet, the big picture is that the Budget aims to push growth to double digit levels with reforms and inclusive policies. Greater attention has been paid to the marginalised sections of the society who have no social security currently and have limited access to institutional finance. Higher growth is to be achieved by supporting agriculture, stepping up investment in infrastructure, boost manufacturing and maintaining fiscal discipline. State governments will share greater responsibility in supporting growth, given that they have bigger share in the taxes collected in the country.

To a  significant extent, economic expansion will be construction led. By 2022, two crore homes are to constructed in urban areas and four crore in rural areas. These homes will have all the basic amenities including round-the-clock power supply and connectivity to roads. Over one lakh kilometres of roads currently under construction are to be completed and work on building another one lakh kilometre to be sanctioned.

Efforts have also been made to reach out to the marginalised section in agriculture and manufacturing to achieve inclusive growth. Thus, there is special focus on making available agriculture credit to small and marginal farmers. To encourage entrepreneurial ventures, particularly by those belonging to the scheduled caste, scheduled tribe and backward classes, who together own about 62 per cent of the small businesses in manufacturing, trading and other services, refinancing services are to be extended to them. This will be done by setting up a Micro Units Development Refinance Agency (MUDRA) Bank.

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The finance minister is also nudging the poor and the rich alike to think beyond their present and set aside some money for the future. Jaitley call its a paradigm shift in thinking towards social security. The well-off gets more tax incentives to invest in pension funds. The employed gets to also choose between Employees Provident Fund and New Pension Scheme for building a retirement corpus. Employees below certain threshold income will be exempt from mandatory contribution to to Employees Provident Fund but their employer will not get that exemption.

For the poor, he has proposed Pradhan Mantri Bima Yojana  to cover accidental death risk of Rs 2 lakh for a premium of Rs 12 per year, Atal Pension Yojana as a defined pension scheme where government will contribute 50 per cent of the beneficiaries premium for a period of five years for accounts opened before December 31, 2015 and Pradhan Mantri Jeevan Jyoti Bima Yojana to cover natural and accidental death risk of Rs 2 lakh for a premium of Rs 330 per year.

Pushing growth is easier now given the global economy is in a much better shape than it was two years ago and consumer sentiment in India is more buoyant with people believing life is indeed looking up. Making that growth inclusive to reduce poverty over the next four years is necessary to ensure everyone benefits from the growth. That’s what Narendra Modi-led NDA government needs to deliver before facing the electorate in 2019 general elections.

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Last updated: March 01, 2015 | 13:59
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